How a total n00b mined $700 in bitcoins

We take a Butterfly Labs Bitcoin miner, plug it in, and make it (virtually) rain.

This is the second in a two-part series exploring Butterfly Labs and its lineup of dedicated Bitcoin-mining hardware. In part one, we looked at the company and the experiences customers have had with it. In part two, we share our experiences running a Bitcoin miner for a couple weeks.

Toiling in the Bitcoin mines

There is a whirring, whining presence in my dining room. I notice it every time I walk through. Every day, it sucks down about one full kilowatt-hour of electricity. In a year, it will consume almost $100 worth of juice—and that's on top of the $274 it costs to buy the box in the first place. Oh, and it's hot, too. If I moved it into my office and could stand the noise, I could keep a cup of coffee comfortably warm on top of the thing. Why on earth would anyone want such a disagreeable little machine in their home?

The short answer: every day, that machine magically generates something like $20 in bitcoins.

The BFL miner: A video intro

Allow me to introduce you to the Butterfly Labs 5GH/s "Jalapeño" Bitcoin miner.

A newbie and his miner

Ars Senior Business Editor Cyrus Farivar tapped me on the shoulder a few weeks back with a proposition. "I've got a Butterfly Labs Bitcoin mining box," he explained. "There aren't that many in the wild right now. I'm working on a story about the company, but I'm about to go on vacation. Do you want to see if you can get the thing working while I'm out?"

I was intrigued. Bitcoin? That's the electronic currency that's quickly rocketed from lame nerd project to ludicrously valuable hot topic, right? I didn't know a lot about the world of Bitcoin other than the fact that "mining" them involved people building custom PCs with tons of video cards to handle the math. I certainly didn't know how to "mine" bitcoins myself or what to do with the things once I had them. I just knew that people eventually try to trade them in for cash somehow (but how to do that was also a total mystery).

And yet here was the opportunity to take a piece of hardware I'd never heard of and see if I could use it to magically create some money out of nowhere. I told Cyrus to send me the Butterfly Labs miner. As he trekked off to Peru for his vacation, I settled in with the little black box.

Butterfly Labs is a company that has drawn a fair amount of controversy for what the Bitcoin community at large perceives as a string of broken promises. The company sells ASIC-based Bitcoin miners—machines that are built around customized chips that do nothing except compute SHA-256 hashes very quickly. Its smallest miner (the one I had to get working) is codenamed "Jalapeño" and computes a bit over five billion hashes per second (or 5GH/s). The problem is that Butterfly Labs started selling the machines long before it actually had a product to sell. It began taking paid-in-full preorders back in mid-2012, and thousands of customers opened their wallets for Bitcoin miners ranging from the small 5GH/s miner at $274 all the way up to the large 500Gh/s miner, which costs $22,484.

Butterfly Labs promised certain performance targets to customers—it initially felt confident that its application-specific integrated circuit (ASIC) designs would deliver one billion hashes per second for every 1.1 watt of power consumed. This proved extremely optimistic. Hardware delivery slipped multiple times. Now, a full year later, the first few real live Butterfly Labs boxes are finally being shipped, though no small number (as many as 30) were sent to journalists to review rather than to paying customers.

But when the little black box showed up on my doorstep, I had no idea about the deep and extremely vocal Bitcoin community or the story behind Butterfly Labs. I didn't really even fully understand what the miner did. I simply knew that I wanted to get this thing working and make some money.

Out of the box

The 5GH/s Jalapeño miner is a black rounded cube with a brushed metal finish. The only connectors on the exterior of the device are on the back: a mini-USB port for data and a power plug. Near the power plug are a series of small red LEDs that the device uses to tell you its status, though there was no documentation in the box to explain what the LEDs meant. The front of the cube contains another red LED to indicate power.

There are two sets of vents, one low on the front and the other high on the rear. The device's internal 80 mm fan draws cooler air up from the front through the fins of the large heat sink mounted on the ASIC chip. It expels the now-warm air out through the top vents.

Front view of the Butterfly Labs 5GH/s Jalapeño miner. The understated Butterfly Labs logo is on the top of the device; visible on its front are the air intake vents.

Front view of the Butterfly Labs 5GH/s Jalapeño miner. The understated Butterfly Labs logo is on the top of the device; visible on its front are the air intake vents.

Another look at the front of the Jalapeño. The exterior of the device is dark brushed metal.

Beneath the metal shell, the interior of the miner is dominated by the ASIC's heatsink. The 80 mm fan, removed for this image, sits atop the heatsink.

The rear of the Jalapeño miner, showing the power and mini-USB connectors.

The Jalapeño miner, disassembled.

After I unboxed the thing and took some photos, I was sort of stuck. I had no idea what to do with the little rounded-off cube.

Before I consulted the Internet for documentation, I tried briefly—and in vain—to see if I could make it work on my own. "I am a geek, and I work at Ars Technica, which is a major technology website of some renown," I thought. "I have built Web servers. I use, like, Linux and stuff. How hard can this really be?"

Too hard, apparently. Connecting it via USB to any of the computers I had handy didn't really cause anything to happen. The device showed up on the USB bus and identified itself, but it didn't do anything. I naively wondered if there was some kind of application I needed to download to "log on" to the device to get it mining.

Enlarge/ When connected via USB, the miner shows up as a "BitFORCE SHA256 SC," which is the ASIC identifier.

Lee Hutchinson

I admitted defeat and consulted the Internet. Unfortunately, as I was to quickly learn, I was coming at the miner with a certain set of false assumptions. The BFL miner is a pretty simple device; it doesn't have an "interface" or a console or anything like that at all. It talks via serial-over-USB, and you do need an application running on your computer to actually do anything with it.

In fact, you need several things: a mining application, a "wallet," and a "pool," though the pool is optional.

That's a complicated question without a clear answer. I didn't consult a tax professional, but in reading around on the web, the most common consensus appears to be that no one really knows for sure.

In this specific example it's not declarable income, no—at least, not for me. But if this was a personally-owned device and I was actually mining for myself? Dunno. I would guess that the safe thing to do, at least in the USA, would be to report it to the IRS as self-employed income and withhold accordingly. But definitely don't take my advice as gospel.

The broken fan doesn't seem exactly hard to fix yourself, but I gather that would be rather useless unless you're actually there to unplug it when it happens (I assume the plastic bit broken off stopped the fan).

In a year, it will consume almost $100 worth of juice—and that's on top of the $274 it costs to buy the box in the first place. [...] The short answer: every day, that machine magically generates something like $20 in bitcoins.

That's really remarkable. Not only could you recoup your investment in ten days, If that exchange rate held up for a year, that would be a 1851% return on investment.

Of course, as the mining power continues to increase, that level of return on investment will not hold up. But still, it must be pretty amazing right now for the people that own these high-performance miners.

The broken fan doesn't seem exactly hard to fix yourself, but I gather that would be rather useless unless you're actually there to unplug it when it happens (I assume the plastic bit broken off stopped the fan).

No, definitely not hard to fix myself. However, when review hardware breaks, you have to answer some additional questions—how will the company react to broken hardware, and more importantly, if they send a replacement, will the same thing happen again?

Rather than just popping in a new fan, I wanted give Butterfly Labs the opportunity to respond, and I wanted to run the new miner for about as long as the original one to see if the problem showed up again.

The broken fan doesn't seem exactly hard to fix yourself, but I gather that would be rather useless unless you're actually there to unplug it when it happens (I assume the plastic bit broken off stopped the fan).

No, definitely not hard to fix myself. However, when review hardware breaks, you have to answer some additional questions—how will the company react to broken hardware, and more importantly, if they send a replacement, will the same thing happen again?

Rather than just popping in a new fan, I wanted give Butterfly Labs the opportunity to respond, and I wanted to run the new miner for about as long as the original one to see if the problem showed up again.

Of course, what I meant was, if you hadn't actually been there to unplug it when it happened, I assume the chip would have fried itself. As in, the problem is larger than "easy to fix problem", it would have actually selfdestructed beyond your ability to repair. (edit: well, I suppose they have build in thermal sensor to make it autoshutdown at X temp.?) (edit2: well I guess, as long as the heatsink is attached, the heatincrease will happen slowly enough that the application would crash, thus making the chip idle.)

Under the assumption that Butterfly labs were aware that you were a journalist, and not a customer, then their warranty support is hard to judge from that incident. Actually my guess is that the version you had first was the "journalist version", seeing as that one did hit the 5ghz mark (but missed every single other spec., size, powerrequirement, powered by USB etc.).

Gotta say, Lee followed proper scientific principle, obtain a 2nd run and repeat the test, much fairer and honest than bodging a repair - that gets you into the realms of super/stupid cooling and overclocking and...well that's not this is really about.

Of course, what I meant was, if you hadn't actually been there to unplug it when it happened, I assume the chip would have fried itself. As in, the problem is larger than "easy to fix problem", it would have actually selfdestructed beyond your ability to repair. (edit: well, I suppose they have build in thermal sensor to make it autoshutdown at X temp.?)

Under the assumption that Butterfly labs were aware that you were a journalist, and not a customer, then their warranty support is hard to judge from that incident. Actually my guess is that the version you had first was the "journalist version", seeing as that one did hit the 5ghz mark (but missed every single other spec., size, powerrequirement, powered by USB etc.).

Hopefully the miner would have throttled and shut down. They are supposed to throttle under excessive heat; I'm assuming this extends to the ability to shut off if necessary. I didn't want to test that on my own, though.

From what I'm reading, all the ones they're shipping are hitting their marks. The interesting factor is the variations—the first & second miners churned out pretty much identical hash rates, but varied pretty wildly in how much power they consumed and how much heat they put out. I'd say it's an indicator that they really are shipping as many of the things as possible, since even the nosy journalist got a loud one. But, you're exactly right in that the specs of the shipping Jalapeño are pretty different from the original design goals.

Power goes in, money comes out - can't explain that! Or there are articles explaining it, but I barely understand a damn thing

Very tempted to buy one of the small devices now, especially thanks to Lee beta-testing MacMiner for us. I don't think I could stand my Mac mini plodding along with 3.1MH/s of CPU/GPU-mining for long, as it's both noisy and inefficient. The BFL devices are priced a little more than an impulse purchase for me, especially with shipping, but if I get it back within the month it's hard to resist. There are less useful things I could waste that money on!

But what happens when these devices are no longer useful for their intended purpose? Can they be traded with some value somewhere, or can they be repurposed? For example for password cracking?

These boxes calculate SHA256 hashes, so with new firmware and applications, they could be changed over to crack passwords, it's not so simple right now though. I would caution anyone against putting any significant money down to buy any miner that isn't deliverable immediately, unless it has a small deposit. Bitcoins could lose 90% of their value in a month, difficulty will probably increase by an order of magnitude in 6 months, and there is no good way to predict either. And you could have your money sitting in someone else's bank account while all this happens. The better thing to do is try and buy something with Bitcoins, that is how this currency will grow.

So, after bitcoins, what useful things can I do with an obsolete miner?

Not much really, at least not in an easily conceivable way. ASIC does stand for Application Specific Integrated Circuit, with the emphasis on the first two words. In this case that application is specifically "SHA256(SHA256(x))" (not MD5 or even just SHA256(x) ) within specific parameters. I don't even think it could be particularly useful for password cracking since the mining network has been described as "cryptographically incompatible" with SHA256 password cracking.

I think part of that has to due with the use of a salt for most password hashes which makes it incompatible with the mining. The other reasons are that the hash+salt would have to be 80 bytes and would have to start with 4 zero bytes - basically a pathologically small subset of password hashes to be useful. How big of a deal those items are though is heavily dependent on whether they are optimized for in the design of the chip.

The rest of it is that to maximize efficiency and minimize cost it pretty much does double SHA256 and nothing else - as opposed to a flexible system like an FPGA (field programmable gate array). To make it even more difficult to conceivably use it for another application, the firmware is locked - though this would be more of a significant delaying factor if someone did manage to come up with a reasonable way to use it for another purpose that was worth the effort.

I guess though that anyone who was using double SHA256 hashing for passwords for whatever reason would probably not want to do that. Though why they would do that in the first place might be the better question.

The problem with overclocking is that if you have to increase voltage, you get a non-linear increase in power draw, i.e. the power efficiency is guaranteed to go down, which is the primary factor here. On the other hand, you have to fit the "profit" curve to the incredibly rapid depreciation of the miner's value as a miner, so there is that, too.

1. What was the bandwidth consumption like on your 'net connection?2. What was the hard disk usage like on the computer controlling the miner?

I ask question 2 in particular because when I dabbled with mining ages ago using my graphics card (before giving it up), a fair amount of hard disk space was used up (I think) for transactions. It wouldn't normally be a problem but that machine I used had a small flash drive so one tends to notice more when a few gigs of free space are lost.

Interesting report, but for anybody with get-rich-quick dreams, keep in mind that they're only now shipping units that were ordered last September, and there's no indication that the lead-time is shrinking. So unless you're confident about what bitcoins will be worth in 9-12 months...

1. What was the bandwidth consumption like on your 'net connection?2. What was the hard disk usage like on the computer controlling the miner?

1. Not enough for me to have noticed. It wasn't even something I bothered to look at. Low enough that it had zero impact on me, and since I work from home I'm pretty sensitive to bandwidth issues.

2. Not enough for me to have noticed. MacMiner takes up probably ~60MB, but mining didn't consume any noticeable amount of space.

Considering the poster was using an SSD on their mining system, #2 sounds like it could be a pretty big plus for them. I mean most consumers wouldn't run into the limits of their SSD in terms of maximum read/write cycles, but if their mining application was runing 24/7 AND was using a significant amount of their drive space it could end up being pretty inconvenient.

How do these ASIC-based miners compare to, say, stuffing a cheap case full of a couple of relatively cheap graphics cards?

There's no way I'd go near a BFL device, simply because there's absolutely no way to predict when they're likely to ship new devices, but if I could use off-the-shelf parts to cobble something comparable together for around the same price...

Basically the Bitcoin is going to lose major value and the mining rate is going to drastically decrease very, very soon, and waiting even a few months would likely make it a waste of money to buy something from BFL.

Since it requires a computer to mine, you have to account for that machine's power usage also. That will easily exceed the 50 watts for the miner itself. I'm thinking somewhere in the range of 300w additional for a desktop machine, or 100 watts or so for a lower power laptop.

Since it requires a computer to mine, you have to account for that machine's power usage also. That will easily exceed the 50 watts for the miner itself. I'm thinking somewhere in the range of 300w additional for a desktop machine, or 100 watts or so for a lower power laptop.

That's a good point - the consideration you might be hooking these violently loud space-heaters up to your PC. The power consumption might be an issue if you didn't normally have a PC running 24/7 anyways, but I imagine many people do. Though people have been hooking these up to a Raspberry Pi for a total consumption of about ~36 watts (for one miner+Pi). That also lets you not turn your home-office or living-room into a noisy sauna; I would see that as the bigger benefit as I do keep mine running 24/7 anyways.

it's not even close ~ a computer is required either way btw, you must attach the BFL device to a PC/Laptop. That said, a Radeon 7970 will hit ~ 650 MH for ~399$. That's about 7x slower, and it will consume ~350 watts . If you went batshit crazy and put a system together with 4 of them, that's still only ~ 2.6 GH, and you'd need a 1200 watt PSU and an air conditioner just for that rig.

If you want in right now, you can buy those USB Sticks, Eruptor Sapphire, they hti 336 MH, and use a cool 2.5 watts of power, they arnt cheap though at ~150-200$ each. And 336 MH is nothing special, a Radon 7850 will pull those numbers for ~170$, though at a huge power difference, and thus less profit.

However, I think 150$ is too much to spend for 336MH at this point, it will take 8 mos to break even. You can put 10 of them or more in a USB HUB, and rack up the GH, but they are just too expensive at this point. They are availible NOW though.. 10 of them will net you ~3.3 GH, still slower then the Jalapeno, and at 3x the cost.

GPU/CPU mining is dead, and FPGA is on it's way out. It's ASIC or nothing now. And that situation is only going to get more extreme, very shortly. If you want to GPU mine, consider LiteCoin.

Since it requires a computer to mine, you have to account for that machine's power usage also. That will easily exceed the 50 watts for the miner itself. I'm thinking somewhere in the range of 300w additional for a desktop machine, or 100 watts or so for a lower power laptop.

That seems...really high. In any case, if you're like me, you've already got a number of computers running 24/7 anyway. If you plug the miner into one that's already running, it won't use appreciably more power. The only reason I didn't keep the miner on my main desktop is because it was too loud, so I instead stashed it in my dining room hooked up to my MBA. If I actually owned the box and was going to keep it and run it permanently, I would have shoved it into the server closet and hung it off of one of the always-on boxes in there.

Lee Hutchinson / Lee is the Senior Reviews Editor at Ars and is responsible for the product news and reviews section. He also knows stuff about enterprise storage, security, and manned space flight. Lee is based in Houston, TX.